Good day, and welcome to the Bristol-Myers Squibb Second Quarter 2025 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Mr. Chuck Triano, Senior Vice President and Head of Investor Relations. Please go ahead, sir.

Thank you, and good morning, everyone. We appreciate you joining our second quarter 2025 earnings call. Joining me this morning with prepared remarks are Chris Boerner, our Board Chair and Chief Executive Officer; and David Elkins, our Chief Financial Officer. Also participating in today's call are Adam Lenkowsky, our Chief Commercialization Officer; and Samit Hirawat, our Chief Medical Officer and Head of Global Drug Development. Earlier this morning, we posted our quarterly slide presentation to bms.com that you can use to follow along with Chris and David's remarks. Before we get started, I'll remind everybody that during this call, we will make statements about the company's future plans and prospects that constitute forward-looking statements. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in the company's SEC filings. These forward-looking statements represent our estimates as of today and should not be relied upon as representing our estimates as of any future date, and we specifically disclaim any obligation to update forward-looking statements even if our estimates change. We'll also focus our comments on our non-GAAP financial measures, which are adjusted to exclude certain specified items. Reconciliations of certain non-GAAP financial measures to the most comparable GAAP measures are available at bms.com. Finally, unless otherwise stated, all comparisons are made from the same period in 2024, and sales growth rates will be discussed on an underlying basis, which excludes the impact of foreign exchange. All references to our P&L are on a non-GAAP basis. And with that, I'll hand it over to Chris.

Thanks, Chuck. Welcome, and thank you for joining our second quarter earnings call. In Q2, we continue to make good progress reshaping the company for long-term sustainable growth. I'm pleased with our performance and our financial results speak to that. Building on the momentum from the first quarter, we saw strong demand across our growth portfolio and continue to optimize our cost structure to match the needs of our business. Let's double-click on our quarterly performance on Slide 4. Our growth portfolio delivered another strong quarter with sales increasing 17% year-over-year, primarily driven by demand across all key brands. David will provide more color on our portfolio's performance in his remarks. In addition to strong performance in our growth portfolio, we continue to make regulatory progress across the globe. In Europe, we secured approval for both Opdivo in neoadjuvant lung cancer and for Qvantig across multiple solid tumor indications. Additionally, in the U.S., we appreciate recent actions by the FDA that have resulted in streamlined patient monitoring requirements and the removal of REMS programs for all cell therapies. This is expected to enable more patients to benefit from these transformative therapies over time. With respect to capital deployment, we announced strategic partnerships with BioNTech to expand and extend our immuno-oncology leadership as well as with Philochem to strengthen our radiopharmaceutical business and expand our focus in prostate cancer. I will discuss these deals in a moment. With the results achieved in the quarter, we are again raising our top line guidance as well as our bottom line guidance before considering acquired IP R&D charges in the quarter. Our recent launches of Cobenfy and Qvantig are progressing well. Cobenfy has delivered strong performance since launch, and we have consistently received positive feedback from physicians. They are seeing firsthand the medicine's differentiated profile with robust efficacy on both positive and negative symptoms and improved cognition. Regarding the U.S. launch of Qvantig, early feedback is encouraging, with strong uptake delivering treatment in just 3 minutes. This saves time for patients, caregivers, and providers while also improving clinic efficiency, increasing patient comfort and reducing treatment complexity. Additionally, fewer port procedures streamline care allowing physicians to treat more patients. Now moving to recent business development initiatives on Slide 5. First, we entered into a global strategic partnership with BioNTech to codevelop and commercialize BNT327, a potentially transformative PD-L1 VEGF bispecific that could set a new standard of care across multiple tumor types. We're excited to bring together BMS's deep scientific and clinical expertise, development and regulatory capabilities, and commercial infrastructure in the IO space with BioNTech's innovation on BNT327. With a strong partner, we're well positioned to accelerate existing clinical trials, expedite time to market, and expand the number of indications. The combined capabilities of BMS and BioNTech give us the opportunity to place BNT327 within the first wave of launches in this arena, either first or second to market, a critical advantage in terms of maximizing the commercial opportunity. BNT327 has the potential to become another needle-moving IO therapy and accelerate our overall growth trajectory. The partnership is off to a great start. We are well underway in advancing a robust joint clinical development program that expands upon the initial indications by further developing BNT327 in numerous additional tumor types in combination. We look forward to sharing more information in the future. Separately, in terms of our early stage pipeline, we entered into a license agreement with Philochem for exclusive worldwide rights to OncoACP3, which is a potential best-in-class radiopharmaceutical therapeutic and diagnostic agent with the opportunity to become a breakthrough treatment for prostate cancer. We believe this collaboration will further strengthen our position in the rapidly advancing radiopharmaceutical space. Earlier this week, we announced a transaction with Bain Capital to form a new company focused on advancing innovative immunology therapies. As part of this transaction, we out-licensed 5 assets to a newly formed company, including 3 clinical stage compounds and 2 Phase I ready compounds. This deal represents a compelling opportunity to accelerate the development of these promising immunology assets while also allowing BMS to participate in future value creation through royalties, milestone payments, and a roughly 20% equity stake. BMS will continue to have a strong presence in immunology. We are focusing our immunology R&D efforts in areas where the company is best positioned to lead. These strategic BD initiatives demonstrate our ability and flexibility to continually identify opportunities to both source external innovation and also externalize pipeline assets where appropriate. This is all in support of our objectives of driving improved growth in the outer years and attractive returns for shareholders. Moving to our key data catalysts on Slide 6. We're entering a data-rich period. In the next 12 to 24 months alone, we expect 7 registration assets and 7 meaningful life cycle management opportunities. These represent important needle-moving events that can derisk the pipeline and help shape our trajectory through the end of the decade, recognizing we've had a few studies read out this year where results were not as expected. We are reviewing all of our near-term studies to best ensure the timely delivery of these programs with the highest probability of success. While we are encouraged by the overall breadth of our pipeline, I would highlight 3 new molecular entities with near-term data readouts. We expect readouts for milvexian in acute coronary syndrome and secondary stroke prevention next year and for atrial fibrillation in 2027. Data for admilparant, idiopathic pulmonary fibrosis is expected next year. And we're also expecting to see MRD negativity data in-house later this year and PFS data next year from the Phase III EXCALIBER study of iberdomide. This could provide additional validation of our CEL MoD platform as a next-generation potential standard of care in multiple myeloma. In terms of life cycle management, we now have several ongoing registrational trials for Cobenfy in Alzheimer's disease patients. These include studies in Alzheimer's psychosis, agitation, and cognitive impairment. In addition, we are also enrolling a Phase III study in bipolar 1 disorder. In addition, we have attractive opportunities to invest in numerous oncology pivotal trials. BNT327 is enrolling in first-line non-small cell lung cancer and small cell lung cancer. The study in first-line triple-negative breast cancer is expected to begin later this year. We're also advancing next-generation platforms that could redefine their respective categories. We are initiating 2 registrational studies for our PRMT5 inhibitor, one in non-small cell lung cancer and another in pancreatic cancer based on encouraging early data with additional longer-term non-small cell lung cancer results to be presented at World Lung. Additionally, we are now recruiting a pivotal study for our EGFR HER3 targeting ADC Iza-bren in first-line triple-negative breast cancer and expect early data in non-small cell lung cancer and other solid tumors later this year. Lastly, in immunology, we are also now enrolling patients in a pivotal Phase II study for our CD19 NEX-T cell therapy in severe refractory lupus. Data readouts are expected to continue next year and throughout the end of the decade, providing an increasing line of sight into the strength of our pipeline. We are investing in and prioritizing areas where we see the strongest potential for high-value assets. We are doing what we said we would do, driving focused execution across the business and delivering solid results as we advance our multiyear plan to emerge as a top-tier sustainable growth company by the end of the decade. Finally, I want to welcome Dr. Cristian Massacesi to BMS, who will be joining us starting tomorrow as Executive Vice President, Chief Medical Officer, and Head of Development. It's a pivotal time to lead our development organization given the number of key pipeline advancements we are making in the months and years ahead, and I look forward to the impact that he will be bringing to our pipeline and the team. I also want to thank Samit for all of his contributions and leadership during his 6 years at BMS and his commitment to groundbreaking science on behalf of our patients worldwide. With that, I'll turn it over to David.

Thank you, Chris, and good morning, everyone. We continue to deliver strong performance in 2025. Our growth portfolio remains a key focus, and we are executing on driving top line growth and prioritizing investments to ensure we are positioned in the company for long-term sustainable growth. Now turning to the second quarter sales performance on Slide 8. Total company revenues were approximately $12.3 billion, reflecting strong demand across our business. Global sales of the growth portfolio increased approximately 17%, driven primarily by demand for our IO portfolio, Breyanzi, Reblozyl, and Camzyos. Let's start a review with the oncology portfolio on Slide 9. Opdivo global sales were approximately $2.6 billion, up 7%, driven primarily by demand. In the U.S., revenues approximately $1.5 billion were largely driven by a strong launch in MSI-high colorectal cancer and continued growth in first-line non-small cell lung cancer. Outside of the U.S., revenues grew 7%, driven primarily by volume growth and one-time favorable adjustments in the quarter. Turning to Qvantig. We are pleased with the performance in the quarter. Sales were approximately $30 million. The launch in the U.S. is going well with use across all indicated tumor types, receiving a permanent J-Code on July 1, which will support additional conversion as reimbursement improves. Due to the strong performance year-to-date, we now expect global Opdivo sales together with Qvantig to deliver stronger growth in the mid- to high single-digit range for the full year. Now turning to our hematology performance on Slide 10. Reblozyl global sales were $568 million in the quarter and over $1 billion year-to-date, reflecting continued strength across our MDS-associated anemia indications. In the U.S., revenue growth was up 30% versus the prior year, primarily due to demand growth in first-line RS positive and RS-negative MDS-associated anemia. Outside of the U.S., Reblozyl sales grew 46%, driven by continued demand across newly launched markets. Turning to Breyanzi, revenues were $344 million in the quarter. Global revenues grew 122%, reflecting strong demand across all indications and higher-than-expected infusions that benefited the second quarter. We expect strong second half with sales skewed more towards the fourth quarter as the third quarter normalizes. In the U.S., sales were $255 million, more than doubling again this quarter, which reflects growth in large B-cell lymphoma, expansion from new indications approved last year and improved manufacturing success rates. Outside of the U.S., sales were $88 million, nearly tripling due to strong demand and launches in new markets. Moving to our cardiovascular performance on Slide 11. Starting with Camzyos. Global sales were $260 million, growing 86% due to robust demand. In the U.S., sales were $214 million, up 65%, driven primarily by increasing new patient starts. Sequentially, revenues grew 70%, driven by demand as well as a typical second quarter inventory build. And outside the U.S., sales were $46 million, reflecting launch momentum in over 20 markets. Eliquis global sales were $3.7 billion, growing 6%, primarily due to strong demand, with U.S. sales growing 4% and ex U.S. sales growing 12%. Moving to immunology on Slide 12. Sotyktu sales grew 29% globally. In the U.S., sales increased 5%, primarily due to higher demand and an inventory build which was partially offset by higher rebates associated with increased commercial coverage. We remain focused on driving further demand growth with our improved access position to help offset the impact of higher rebates. Now moving to discuss Cobenfy Slide 13. Cobenfy sales were $35 million in the quarter and $62 million year-to-date. The launch of Cobenfy is tracking as we expected, weekly total prescriptions continued to grow, and we expect continued steady growth with sales in the second half of the year being higher than the first half. Now let's move to the P&L on Slide 14. Gross margin was approximately 73%, primarily due to product mix. As expected, operating expenses were approximately $260 million lower compared to the same period last year, primarily reflecting the results of our ongoing strategic productivity initiative. Our effective tax rate in the quarter was 16.1%, and including the impact of the upfront charge for the BioNTech partnership. Overall, diluted earnings per share was $1.46 due to the strong performance in the quarter and includes approximately $1.5 billion or $0.57 charge related to the BioNTech strategic partnership, which is reflected in acquired in-process R&D. Turning to the balance sheet and capital allocation highlights on Slide 15. Our financial position remains strong with roughly $13.9 billion in cash, cash equivalents and marketable securities as of June 30. We generated cash flow from operations of about $3.9 billion in the second quarter. Our capital allocation priorities remain unchanged as we continue to take a strategic and balanced approach; investing in our growth portfolio of brands, along with business development, are our top priorities. We are on track with our plan to further deleverage our balance sheet and pay down $10 billion of debt by the first half of 2026 relative to our March 31, 2024, balance and we remain committed to returning capital to shareholders through our dividend. Now turning to our guidance on Slide 16. We're increasing our full year reported revenue guidance by $700 million at the midpoint to a range of $46.5 billion to $47.5 billion, reflecting continued strong performance of our growth portfolio, better-than-expected legacy sales in the second quarter and a favorable impact of approximately $200 million related to foreign exchange rates. Additionally, we now expect the legacy portfolio to decline approximately 15% to 17% for the year, a more moderate rate than previously anticipated due primarily to Revlimid's strong year-to-date performance. We now project full year Revlimid sales of approximately $3 billion. We maintain our gross margin guidance at approximately 72% as some of our high-margin legacy brands are expected to continue to decline through the second half of the year, and Eliquis revenues to be more evenly phased throughout the year. We are adjusting our operating expense guidance to increase slightly to approximately $16.5 billion, reflecting investment behind recent business development deals, and additional investment opportunities within our growth portfolio. As previously guided, our operating expenses are anticipated to be higher in the second half of the year compared to the first half, reflecting timing of investments, including the recently signed BD deals. Our operating margin target of approximately 37% for the full year remains unchanged. For OI&E, we now expect annual income of approximately $250 million due to higher-than-anticipated royalties and favorable interest income, and we're maintaining our full year tax rate guidance of approximately 18%. As a result of the strong performance year-to-date when excluding acquired and process R&D charges, the midpoint of our 2025 non-GAAP EPS guidance would have increased approximately $0.20 per share. After including these charges of $0.57 per share, primarily related to the BioNTech partnership, our expected EPS for 2025 is now projected to be between $6.35 and $6.65. This increase reflects a strong performance of our growth portfolio as well as better-than-anticipated sales from our legacy portfolio and accommodates recent business development and other growth-oriented investments. All in all, I'm pleased with the performance of the business year-to-date. I'd like to thank our colleagues around the world for their continued focus and execution. With that, I'll turn it back to Chuck to start Q&A.

Thanks, David. Operator, can we please start the polling for the Q&A session? Thank you.

And the first question will come from Geoff Meacham with Citibank.

Chris, you mentioned the upcoming period, which will have a lot of data. Regarding the Phase III results this year, are there any you’d highlight or do you think you could still meet the goals for line extensions or label expansion? I understand you may need to discuss this with the FDA, but I am curious if there might be a quicker way to achieve the line extensions you were aiming for.

Thanks for the question, Geoff. Let me just say a few things about the studies that I've read out so far, and then maybe I'll turn it over to Samit to answer your question directly. First, as we look back at the studies that haven't gone the way we had anticipated, there are 2 things I think are important to keep in mind. The first is that when you look at those studies in totality, while they were meant to answer important scientific questions or clinical practice questions, they collectively have relatively limited impact on the long-term growth of the company. What is more important is whether or not those studies have any implications going forward. And we don't see any reform from those studies to future opportunities. And so we feel good about where we are in the growth potential as well as the importance of those studies that we'll be reading out over the next 12 to 24 months in order to shape that growth trajectory. But Samit, maybe you can comment on the studies that read out this year.

Yes, thank you, Chris and thank you, Geoff. I think one of the examples of how we think about deeper review of the data would be, let's say, independent trial for Reblozyl, for example. As we've communicated, and we look deep into the data. And there is clinically meaningful impact that we do see not only on the primary endpoint of transfusion independence, but also as we think about the other endpoints. And so based on that, we are right now planning to interact with the health agencies around the world to ensure that we give the best chance for the drug to be able to show its activity and provide a much-needed therapy for unmet medical need in anemia-associated myelofibrosis. And we'll continue to watch out if there are other opportunities for other molecules as we go through the rest of the year.

Next question will come from Courtney Breen with Bernstein.

We really wanted to focus a little bit on kind of the macro pressures or the industry pressures that you guys are facing, and you announced recently the direct-to-consumer offering in conjunction with Pfizer. Can you give us a bit more context on kind of why this felt like it was the right time to announce this deal? Was this a direct kind of mandate or agreement with this administration? And is this potentially a platform that you may look to utilize with any of your other products over time? And what kind of products might be the right ones to fit into a platform like this.

Yes. Thanks for the question, Courtney, and maybe I'll start, and then I'll turn it over to Adam. Look, we're pleased that we were able to implement this program with Pfizer. I think this administration has done a nice job highlighting the need to cut out the middleman from the U.S. Health Care System. Remember, roughly about half of every dollar spent on a branded medicine goes to someone who took absolutely no R&D risk in the creation of that product. And the Eliquis direct-to-patient offering is a way for us to offer meaningful decreases in out-of-pocket costs for patients, increased transparency and take a step, as the President has suggested, in cutting out traditional middlemen, but maybe I'll have Adam speak to the program more specifically.

Yes. Thanks, Chris, and thanks, Courtney, for the question. So as part of our commitment to increasing patient access to our medicines. Following some of the conversations we've had with the administration, we announced with our Pfizer counterparts a few weeks ago that beginning September 8, uninsured, underinsured cash-paying U.S. patients could purchase Eliquis directly through Eliquis 360 support. So patients will be able to pay a discounted rate over 50% less than the list price. As Chris was alluding to, we've heard from patients, policymakers, and prescribers have all called for a simpler, more affordable, more transparent access, and now patients will have full transparency into their costs. And it cuts out the middleman there. So we're launching this new direct-to-patient option as part of our commitment to increasing patient access and affordability.

The only other thing, Courtney, just to your question about whether there may be other opportunities, we're obviously going to continue to look within our portfolio to see if there are opportunities where that makes sense. And I think we'll also continue to be looking across the industry for other potential opportunities. So more to come on that.

Next question will come from Chris Schott with JPMorgan.

Just a 2-parter on Cobenfy. Maybe just first on the launch dynamics. I would love just to hear what you see as the primary hurdles to adoption for physicians at this point given reimbursement, et cetera, in place. And the second part was, as we look forward to the Alzheimer's psychosis results coming later this year, maybe just help frame out expectations in terms of the type and magnitude of benefit you feel you need to show to see adoption here. And would the study alone be enough to support a filing?

Thanks for the question, Chris. Maybe I'll ask Adam to start on the first part and maybe hit on what the commercial threshold is for ADP. And then Samit, you can give an update on where we are.

Thanks, Chris. Cobenfy is performing in line with expectations, and we're now tracking over 2,000 TRxs on a weekly basis. We expect to see steady TRx growth as we continue to execute our plan. And we're still in the early stages of launch. And as we previously communicated, we knew it was going to take time to change what's been decades of entrenched prescribing behavior and indeed, I think that's been the case. Physician feedback continues to be very positive regarding Cobenfy's differentiated profile. What's encouraging is that the vast majority of physicians have indicated they intend to prescribe Cobenfy. So we're making steady progress with adding a number of new trialists as we're growing trialists each week. But we definitely have an opportunity to continue to accelerate breadth and depth of prescribing. So let me talk a little bit about what we're doing and also some of what we're hearing. First, we're increasing the size of our community field force to increase reach and frequency as we know it takes multiple calls to change physician behavior. For your question, the most common question that we receive from physicians is how to switch. And we're focused on clarifying switching approaches from D2s to Cobenfy through peer-to-peer initiatives, introducing real-world data. We also have a Phase IV switch study that reads out at the end of the year. I think all of which will help build physician confidence. And then finally, we're expanding it to the hospital setting. So this is a planned sequence launch first into the community then into the hospital and that opportunity to drive new patient starts. Patients are typically maintained on treatment from the hospital and then moved into the community. So in the hospital, it's around 20% to 25% of NRxs initiated there. So based on all leading indicators we're seeing, we're confident that Cobenfy is going to be a big drug in schizophrenia and longer term will be fueled by additional indications such as our Alzheimer's program.

Yes, thanks, Adam, and thank you, Chris, for the question as well. For Cobenfy, from Alzheimer's disease perspective, we remain confident in the product and certainly are conducting all our clinical trials with that mindset, not only in the psychosis program, but also for agitation as well as cognition. For ADEPT-2, we're certainly looking forward to the database lock, and we remain blinded to that data at this time. As Chris mentioned earlier during his prepared remarks, we are also reviewing our key studies to make sure that internally, we give the highest probability of success to all of our programs. And specifically, as it relates to ADEPT-2 in preparation of that database lock, we are conducting the clinical trial site reviews that could impact the timelines a bit. But with that said, we are still targeting the top line data by the end of the year for ADEPT-2. As far as the filing is concerned, as I think as we mentioned already, we are conducting 3 studies in Alzheimer's Disease Psychosis, ADEPT-2, ADEPT-4, and ADEPT-1. ADEPT-4 and ADEPT-1 will read out in 2026. And so 2 of the 3 studies need to be positive for us to be engaging the health authorities for a filing and registration purposes. We are glad where we are in terms of our enrollments and looking forward to the data readouts.

The next question will come from Evan Seigerman with BMO.

I wanted to touch on some of the rationale for partnering with BioNTech. And specifically, what you saw in their PD-L1 VEGF bispecific. There's a lot of assets out there. What attracts you to the partnership with them? Maybe walk me through some of the differentiation and how you can work with them to accelerate this to potentially the early kind of in the class of assets.

Sure. Maybe I'll just say one word and then I'll turn it over to both Adam and Samit first. As I mentioned in the prepared remarks, we're excited about the opportunity that we have with BioNTech. We think this is going to be a really value-added partnership for us going forward. One of the things that was particularly attractive was that this is an asset that is in a position to be either first or second as this technology evolves. We know from our experience in immuno-oncology with Opdivo that, that positioning in the marketplace is really important. And so that was one of the factors among many that attracted us to the BioNTech partnership. But maybe, Adam, you and Samit can pick it up from there.

Yes. Thanks for the question, Evan. So our partnership with BioNTech, I think, has the potential to enhance our growth profile in the back end of the decade into the 2030s while strengthening and diversifying our oncology portfolio. As you know, we've been a leader in IO now for well over a decade, and we do believe that BNT327 has the potential to become a new standard of care for many patients and could transform the current landscape as a backbone of cancer treatment. So Chris talked about the importance and certainly a learning from Opdivo. Coming to the market being at a leapfrog to go into a first or second position across tumors is critical. So our focus, and Samit will touch on this is around speed to market. We also have the infrastructure in place. We can leverage our capabilities that we've built over years, commercializing out 3 IO agents. So by leveraging our leading commercial and operational capabilities with BioNTech scientific expertise, we can help accelerate and broaden the development of the program and explore new indications to maximize the potential.

Yes. And just to build on what Adam just said, look, with the 2 validated targets on bispecific PD-L1 and VEGF, the specificity of delivering the drug to the tumor because of expression of PD-L1, that brings a differentiation compared to the PD-1 VEGF inhibitors. Of course, we'll need to continue to watch out the evolution of the data across the tumor types that these drugs are being explored in, but certainly very excited to provide our help as well as support in the collaboration because of our footprint in 50-plus countries to conduct clinical trials. Initiation of the clinical trial certainly, as Chris mentioned earlier, is in small cell lung cancer, non-small cell lung cancer, and triple-negative breast cancer, but there's a large CDP that is being built right now, and we'll be able to share that later in the year.

Your next question will come from Luisa Hector with Berenberg.

And maybe a quick thank you to Samit for all the insightful dialogue over the years and good luck. So I wonder if you could quantify the stocking and any gross to net impact? Quite a few mentions. But I don't know if you have the numbers sort of year-on-year as well as the Q2 sequential. And then perhaps on the immunology collaboration with Bain, the spin-off. Just give a little bit more color on the rationale for those particular assets going out. Will you have opt-in rights? And are there any other therapy areas where this externalization approach might be useful?

Yes. We are raising our guidance by $700 million, primarily due to increased demand. About $200 million of this is related to foreign exchange, mainly affecting our legacy and IO portfolios, which are more tied to business outside the U.S. The remaining $500 million is nearly evenly divided between our growth portfolio and the strong performance we observed across several brands mentioned earlier. Additionally, we have increased the Revlimid guidance by $500 million, but much of that gain will be offset by increased erosion of Abraxane, Sprycel, and Pomalyst. Overall, this is a significant increase, and we are very pleased with the performance of our growth portfolio as we move into the rest of the year. In response to your final question, there was minimal stocking observed during the quarter, indicating strong underlying demand growth.

And just to add to what you asked and what David just said, from an immunology perspective, we've always talked about 3 elements of targeting the immunological diseases: inflammation, resetting the immune system, and then creating a homeostasis. And within the inflammation part, we do have Sotyktu, which is already approved in psoriasis, we recently submitted around the world applications for psoriatic arthritis, and we are pursuing additional indications in SLE and Sjogren’s syndrome. We have LPA1 in IPF and TPS, as we heard before, IPF will read out next year. But what we are truly really excited about is the resetting of the immune system through the use of cell therapies and that's where the emerging data is quite exciting as we think about SLE and more data that will be emerging in systemic sclerosis, myositis, MS as well as myasthenia gravis. And with the initiation of the pivotal trial, now we have to enroll that as quickly as possible and in a couple of years, start to see how we can impact that disease in a positive way.

And just to sort of dovetail back on the rationale for this particular agreement with Bain and how we would think about this going forward. The creation of the new company centers around 5 assets, 3 of those assets are clinical stage, and 2 are Phase I ready. We have been discussing, as you know, for the better part of the last 18 months being diligent to Samit's point, around portfolio prioritization, focusing on those areas where we have a right to win. And as you do that, there are naturally projects that may not make the pay line for us, but still have compelling science or commercial opportunity, and this agreement is a nice way for us to continue to progress those assets while retaining the ability to benefit from any upside. And of course, we'll continue to look at innovative ways to do precisely that as we go forward, whether or not we'll be able to leverage a mechanism like this remains to be seen, but we really like this particular structure for these assets, and we're happy to have kicked this off with Bain.

Next question will come from David Amsellem with Piper Sandler.

I wanted to ask about Camzyos and particularly competitive dynamics with a second myosin inhibitor potentially entering the market by the end of the year or early next year. I guess my question here is, how are you thinking about your ability to drive a steady cadence of new starts with the additional competition, particularly to the extent that Aficamten's REMS potentially is less onerous in terms of echo monitoring? Just how are you thinking about that and your ability to grow the asset, not really this year, but longer term as competitive dynamics intensify.

Thanks for the question, David. We'll ask Adam to handle that one.

Yes, David. So we've continued to deliver strong growth with Camzyos. We're very pleased with performance as we've continued to increase new patient starts, and we've established a strong revenue base, and we expect that to continue from the expansion of our prescriber base, coupled with high persistency. The feedback on our REMS label change has been very positive, easing the burden of echo requirements for both patients and physicians. And although it's still early days post the label change, we've seen physicians treat more patients at the COEs, and we're also making very good progress expanding in the community. As far as aficamten, we don't see any meaningful clinical differentiation there. Camzyos has set a very high bar for efficacy and safety. We have compelling real-world data across now thousands of patients, and we're continuing to grow that every week. It's going to be important to see what their label looks like. But we remain focused on driving growth by broadening our prescriber base from the COEs into the community. And we will be prepared for aficamten when it comes to market, and we maintain a consistent view that we will remain leaders in this space.

Next question will come from Dave Risinger with Leerink Partners.

Congrats on the strong financial performance. So Chris, you had highlighted milvexian first when you discussed major pipeline candidates to watch in coming years. And since the Street consensus only models 2032 sales of $2.3 billion, that reflects a lot of skepticism. So if you and maybe Samit could just help us better understand what you think investors underappreciate about milvexian's likelihood of success in secondary stroke, ACS and AF.

Yes. Thanks for the question, Dave. Why don't we have Samit you start and then Adam, maybe you can speak to the commercial opportunity.

Yes. Thank you for the question, David. Look milvexian, we've spoken before about the way we have thought about the development plan. There were 2 well-conducted studies to define the doses, and the doses we differentiated as a single agent versus combination with a background of dual antiplatelet therapy. For atrial fibrillation, we chose the dose of 100 milligrams BID. And you saw the results from the competitive program where the doses did not hit, the overall event rate was much higher. We have the DMC that continues to observe our dataset. We've enrolled the 20,000 patients in the AF trial. We look forward to the outcomes, but certainly, the overall event rate remains low in that program at this time. For secondary stroke prevention and ACS, again, those trials are enrolling really well. And we have chosen the dose of 25 milligrams BID to be able to give a safe region of dosing to these patients because of the background of dual antiplatelet therapy. Again, DMC continues to look at the data, and the studies continue. And next year, we will be reading out. So I think there is an underappreciation of the differential dosing patterns that we've chosen for the 2 and what we observed in the Phase II programs in TKR as well as SSP that supported these studies.

Yes. From a commercial perspective, Dave, this is a significant commercial opportunity across all 3 indications. We think this has multi-blockbuster potential. So in atrial fibrillation, the fear of bleeding continues to be the main reason why clinicians hold back from using Factor X in more patients, approximately 40% of patients still remain untreated or undertreated leaving them at risk for a stroke. And we know that's due to safety. We believe that a differentiated bleeding profile can drive demand in this untreated, undertreated patient population. In ACS, also a high unmet need remains. One in 3 ACS patients are going to experience a second cardiac event within a year, and we know there's been very limited success in combining Factor X with antiplatelet therapies due to the bleeding profile. So we expect to show meaningful improvements on top of antiplatelet therapy. And finally, in secondary stroke prevention, similarly, around 25% of stroke survivors experience additional preventable strokes. And so you saw the data, the Phase II data that reinforced milvexian's differentiated profile that showed a clinically meaningful reduction in recurrent stroke. So we believe there is a significant opportunity to combine antiplatelets with these new agents like milvexian and not indicate to the risk of bleeding. So taken together, we're very excited about this program.

The next question will come from Asad Haider with Goldman Sachs.

Congratulations on the results. Two quick ones. First, just with respect to the cost optimization program. Can you just elaborate on how you're thinking about the pushes and pulls related to capital needs, given that you also have to support expenditures, like the $40 billion announced CapEx, as well as margin, potentially costly development programs related to expediting the PD-L1 VEGF Phase III clinical trials, in the wake of the BioNTech deal and then you also have the debt paydown in BD. So any updated thoughts on costs and margins as it relates to your goal of shortening the depth of earnings, the earnings trough relative to these new investments and the ultimate return to growth would be helpful. And then 2, just perhaps just very quickly on ADEPT-2 just given that's imminent, just remind us on how we should be thinking about the read across from that trial to ADEPT-1 and ADEPT-4 in 2026?

Thank for the question, Asad. Maybe I'll ask David to start and then Samit, you can quickly hit on ADEPT-2.

Yes, Asad, thanks for the question. A couple of things. I think you hit on multiple points there, cash allocation, capital allocation but as well as margins as it relates to our productivity initiatives. And just as a reminder, we initiated a $1.5 billion initiative back at the end of '23, knowing that we had several business development deals that we had to fund, and that was $1.5 billion. And we completed funding those funds last year and reallocated that to the programs that we talked about, particularly around Cobenfy with the multiple clinical programs that we have in place there, but as well as RayzeBio and funding those types of investments. And also don't forget SystImmune, a very important program that we have there that we're funding that clinical program. Then this year, we announced a $2 billion strategic productivity initiative, which a lot of confidence in being able to deliver that. We're going to deliver $1 billion of that this year, which we said that $2 billion by 2027 will drop to the bottom line. But what that also does is that helps our cash flow position. It gives us more capital to allocate towards business development as well as enables us to do up investments. And I think this quarter is a great example of that, where we saw some opportunities, the #1 BioNTech deal, funding those clinical studies, as you heard from Samit around, particularly around lung and breast. But also, what that enabled us to do is Adam had some up investment opportunities in the growth portfolio, and we were able to invest behind those. So we feel really good about the capability that we're building here and the ability to reallocate resources that are going to drive growth and strength in the long-term growth profile of the company at the end of the decade. And the last thing I'd say is like we have a significant number of Phase III programs that are ongoing right now. And as Chris talked about, over the next 18 to 24 months, we have iberdomide and mezigdomide Phase III programs coming down. We also talked about milvexian Phase III programs that are reading out at the end of next year and AFib reading out. So we have a lot of Phase III programs that are coming down, which enables us to reallocate those to like the multiple Phase III programs we'll be doing with Cobenfy and with the BioNTech partnership. So I'm just really proud of the entire team and the amount of effort and these productivity initiatives in order to fund growth.

Yes. Regarding the second question about ADEPT-2, ADEPT-1, and ADEPT-4, it's important to remember that ADEPT-1 focuses on relapse prevention and is now a 36-week study, which includes a 12-week open-label period. After this, responders are randomized to evaluate the effects of placebo compared to the continuation of Cobenfy to determine when relapse happens. ADEPT-4 is similar to ADEPT-2, but with greater emphasis on enrolling biomarker-positive patients. Overall, as previously mentioned, two out of the three trials need to demonstrate positive results to engage with regulatory authorities for approval discussions. We are genuinely excited about these developments and look forward to the top-line results for ADEPT-2 by the end of the year, followed by ADEPT-1 and ADEPT-4 next year.

The next question will come from Seamus Fernandez with Guggenheim Securities.

So just wanted to get a better sense. It sounds like the trajectory for Cobenfy continues to be quite robust from your perspective. Historically, you've talked about other relative launches like the launch of cariprazine as a good relative marker, just wanted to get a sense of if that relative comp continues to be sort of a focus point for Bristol right now. And where you see the incremental meaningful opportunities to accelerate those scripts? Is it more in gaining access to the Medicare population? Or is it in additional indications as kind of the next meaningful leg of growth to really drive towards that relative comp of cariprazine? And then just a quick second question. Really just kind of hoping to better understand how sustainable the spend is here relative to sales. It seems more like you're kind of modeling the spend relative to future sales to then be consistent with where the sales are likely to kind of trough? Is that the right way to think about it? Or do you actually think that this is a sustainable sort of margin threshold within the context of Bristol-Myers Squibb.

Thanks for the question, Seamus. Maybe I'll have Adam start and then David from there.

Yes, Seamus, thank you for the question. As I mentioned earlier, we anticipate continued consistent growth in TRx as we implement the plan I outlined. Cobenfy is performing significantly better than all previous branded schizophrenia launches. We have surpassed 45,000 TRxs since its launch. The major opportunity lies in transforming the treatment approach and overcoming long-standing prescribing habits that have persisted for decades. Therefore, we are focused on increasing both the number of trials and the depth and breadth of prescriptions. Each week, I assess our progress in adding prescribers, the depth and breadth of prescribing, and the intent to prescribe. All of these leading indicators are showing very positive trends. To be honest, there hasn't been much precedent for comparison because nothing has existed in this area for such a long time, but we are certainly pleased with our observations so far. Based on the feedback we continue to receive from physicians, we are confident that Cobenfy will be a significant medication in the treatment of schizophrenia. Additionally, every week we receive insights from both physicians and patients. Just last week, a physician informed us that they transitioned a patient from another medication to Cobenfy, and now the patient is optimistic about their future, even considering signing up for a class due to improvements in attention, judgment, and insight. This is just a small example of the positive feedback we receive weekly, which reinforces our confidence that this will be an important drug in the schizophrenia space. As Chris, Samit, David, and I have mentioned, we believe this product has the potential to generate multibillion-dollar revenue from additional indications in the long term.

Thank you for the question on margins. It's important to note that we have significant financial flexibility concerning operating margins. This is partly due to our strategic productivity initiatives, including the $1.5 billion we reallocated to growth drivers last year and the additional $2 billion in savings we're targeting by 2027. However, we are currently experiencing a decline in gross margins because some of our higher-margin legacy products, like Revlimid and Pomalyst, are now contributing less to our margins. On the positive side, over the next few years, we expect gross margins to improve for two reasons. First, our growth portfolio now represents over 54% of our total business, and this portfolio has a higher average gross margin than our overall company average. So, as this portfolio grows, it will positively impact our gross margins. Additionally, as Eliquis goes generic in 2028, it will also contribute to margin improvements as we move towards the latter part of the decade. We are confident in our ability to manage the productivity of our company. Furthermore, Chris and I have consistently emphasized our commitment to investing in the company’s long-term growth drivers. You saw evidence of this in our latest quarter, and we'll continue to pursue opportunities. I also want to highlight that as we naturally progress in our development spending, we have numerous programs that are launching, and we are reallocating resources from older brands to new ones. For instance, we transferred resources from Eliquis to Camzyos and eventually to milvexian. Opdivo is another example where, as we introduce BioNTech 327 to the market, we'll be able to shift resources from Opdivo to it. Strategically, we are making thoughtful decisions about where to drive growth and how to reallocate resources to these opportunities.

Our next question will come from Carter Gould with Barclays.

A little bit of a change of pace here. But if you indulge me, I always appreciate your view on the policy side, Chris. IP is under attack across the industry from multiple sources, but most notably compounding, while Bristol is not directly impacted today, it's not unreasonable, it's left unchecked, that Bristol could be impacted in the future. Does Bristol share this view? And are there efforts you've taken either independently with peers, pharma or in consultation with the administration and more staunchly advocate defensive IP in the space.

Thanks, Carter, and I appreciate the change of pace. Always happy to talk policy. So I think one of the things that we've consistently said about the policy environment we operate in is that it's an ecosystem. It's an ecosystem that has multiple parts and components. And obviously, we spend a lot of time talking about changes at FDA and NIH and potentially the impact of policy proposals like MFN. But I think the point you're raising is one that's critically important: underpinning all of this ecosystem is intellectual property and the protection of intellectual property. What I would say is, generally speaking, we've continued to see a lot of pressure on IP coming from multiple fronts. Internationally, that's been the case. We've seen it in the example that you cited. There are obviously differences with perspective on IP coming from different sectors of the economy. The nice thing that we have done as a company is we've got a very strong IP team. The leadership of that IP team that the company has, in turn, become leaders of IP for the industry. And so we feel that as a company, we've been front and center in helping to shape a positive environment around IP. There are a lot of efforts across both bio and pharma to continue to maintain a strong IP environment. But IP is one of those things that you never take your eye off of the ball on just given it is so central to the ecosystem that we have and underpins really the success that we've had as a country and leading in the biopharmaceutical space. So it's a great question and something that we continue to stay focused on.

Next question will come from Akash Tewari with Jefferies.

So for Cobenfy in the emergency schizophrenia trial, you had about 80% of patients get to the high dose. Given there's a clear issue with dropouts in the original Xanomeline study, and there's a clear dose response. What percentage of patients do you think for your upcoming AD Psychosis study get to that 150 or 200 mg dose? What dropout rate have you powered for this upcoming study? And then maybe stepping back, is Bristol still as bullish on the probability of success in the study as when the original Karuna deal was announced? And was there something about site conduct in the adjunct trial that made you concerned about it for the upcoming AD Psychosis study?

I'll start by addressing the various questions as best as I can. It's important to note that we currently lack visibility into the data, so I can't provide specifics. The trial is structured with four dose escalations over the first four weeks. The last one, the 200-milligram dose of Cobenfy or KarXT combined with 20 of trospium, is optional and depends on tolerability. It's crucial to recognize the significant differences between the AD psychosis trial we're conducting and a 30-year-old study that focused solely on Xanomeline, which faced tolerability challenges leading to a higher dropout rate and fewer completers due to toxicity. Therefore, I advise against drawing direct conclusions from that earlier trial. Further, regarding the impact on certain endpoints, considerable focus was given to cognition using the ADAS-Cog, where significance was identified only at the highest dose level. For the psychosis-related symptoms, we noted dose-dependent improvements, although pairwise analysis wasn't performed. We observed meaningful effects on hallucinations, delusions, aggression, and suspiciousness. Overall, we are eagerly awaiting the data from ADEPT-2, which will inform our future discussions once it becomes available.

And what I would say just in general is just to close out that we remain very excited about the potential for Cobenfy in Alzheimer's disease, psychosis as well as the underlying science behind that indication.

Next question will come from James Shin with Deutsche Bank.

One for Chris. Chris, you followed through with picking winners and calling losers from Bristol's pipeline. So once Cristian settles into his seat, what sort of changes can we expect from the early-stage pipeline or the business development strategy? And maybe should investors expect a shift in Bristol's trough?

Thanks for the question. Look, I think that we're doing everything we can as a management team today to do 2 things. One is shorten the time period that we're in a trough and make sure that we're driving sales as quickly as possible so that we can exit the decade with the strongest growth profile that we can. And you see that across the board, both with respect to the strength of the business and our existing growth portfolio, the fact that we've got a robust pipeline of mid- to late-stage assets that can continue to progress nicely. And the fact that we're continuing to be very disciplined so that we have the financial flexibility to where it makes sense for the company to continue to source innovation externally. With respect to the impact that Cristian will bring. Look, I think in many respects, not just with respect to the early pipeline, but really across drug development, there's going to be a focus that we have on execution. As we've talked about, our pipeline and delivering on that pipeline is very important. And so we have to be acutely focused on strong execution. Cristian has a very strong background in that respect across his career, particularly with respect to his last company. Also, when you think about executing at scale, ensuring that you have the strongest, highest performing teams with the best people that you can find is going to be important. And again, he has a very strong track record there. The last 2 things I would say that we expect him to bring to the table are, first, a continuation of some of the work that Samit and his team have already started. Samit's really led an effort to rethink how we're thinking about drug development, everything from where and how we have our teams working to the employment of AI and technology. We need to see that work continue and in some places, accelerate. And then the last thing I would say is any time you bring somebody in from outside the company, you would expect that they would bring a different approach, a different level of energy, a different way of thinking. And so I think there's an opportunity for a refresh there as well. But overall, Samit's team has put together a very nice foundation that Cristian will benefit from, and we look forward to see him join the company starting tomorrow.

Thanks, Chris. And we know you all have a busy day with other companies reporting and other calls. So operator, if we could take our last question, please.

Our last question today will come from Stephen Scala with TD Cowen.

On the Q1 call, Bristol said that they were exploring a path forward for Cobenfy ARISE data, but that they needed to review all the data and talk with the regulators. I'm wondering, has this additional analysis occurred and have the discussions already taken place? And if so, is there a path forward? And then secondly, on Sotyktu, can you clarify whether it's been filed in psoriatic arthritis? And what is your level of confidence and success for lupus and Sjogren’s?

Thank you, Steve, for your insightful questions regarding ARISE. We have not yet had discussions with the health authority. We are continuing to examine the data and analyze the distribution of patients across the study cohorts. As new data becomes available, we will share updates in future conferences and discussions. Regarding Sotyktu, we are pleased that submissions for psoriatic arthritis have been completed and are eager to see these discussions progress. For systemic lupus erythematosus, the Phase III trials are informed by the well-conducted Phase II study. We’ve recognized the importance of thorough data cleaning and activities in this diverse population. We are diligently cleaning the data as we enroll patients. Additionally, the studies for Sjogren's are progressing well, and we anticipate readouts towards the end of next year.

So thanks, everyone. As Chuck mentioned, we know it's a very busy morning. So I want to thank you all for joining. And as always, the team will be available. Let me just say in closing that we continue to make very good progress, reshaping the company for long-term growth. Importantly, hopefully, you're seeing that we're driving execution really across the business, and that's yielding the results that we saw in the quarter. The second half is going to be a very busy time with the company, but we feel very good about the momentum coming into the second half of the year. And then again, before I sign off, I just want to again say a big thank you to Samit for all of the contributions and the leadership that he's had at the company over the last 6 years. And with that, I wish you all a good rest of the day and rest of the week, and as always, reach out if you have questions. Thanks.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.